At the present time, Water and Power Company (WPC) has 5-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,050.76 per bond, carry a coupon rate of 10%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 25%. If WPC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? (Note: Round your YTM rate to two decimal place.) 6.53% 7.51% 5.22% 7.84%
Answers
Answer:
6.53%
Explanation:
For computing the after cost of debt we need to use the RATE formula i.e to be shown in attached spreadsheet. Kindly find it below:
Given that,
Present value = $1,050.76
Future value or Face value = $1,000
PMT = 1,000 × 10% = $100
NPER = 5 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after applying this above formula
1. The pretax cost of debt is 8.70
2. And, the after tax cost of debt would be
= Pretax cost of debt × ( 1 - tax rate)
= 8.70% × ( 1 - 0.25)
= 6.53%
Related Questions
A factory machine was purchased for $140,000 on January 1, 2022. It was estimated that it would have a $28,000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 40,000 hours in the 5 years. If the actual number of machine hours ran in 2022 was 4,000 hours and the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2022 would be
Answers
Answer:
$11,200
Explanation:
The computation of the depreciation expense using the units of activity method is shown below:
Before that first we have to find out the depreciation rate which is
= (Original cost - residual value) ÷ (estimated machine hours)
= ($140,000- $28,000) ÷ (40,000 hours)
= ($112,000) ÷ (40,000 hours)
= $2.8
Now for the depreciation expense is
= Machine hours × depreciation per machine hours
= 4,000 × $2.8
= $11,200
Congratulations! You were the 10th caller on the KMTH morning show and you just won $4,000.00. After you calm down, you decide to put the money into a bank account so that you will have even more money for a trip to Europe. Snurling Bank tells you that they will pay 7% per year compounded monthly. How much money will you have for your trip in 7 years
Answers
Answer:
$6,519.98
Explanation:
According to the scenario, computation of the given data are as follows:
Present value = $4,000
Rate = 7%
Rate compounded monthly = 7% ÷ 12
Time period = 7 × 12 = 84
So, we can calculate the future value by using financial calculator.
The attachment is attached below:
FV = $6,519.98
Novak Corp. has 7400 shares of 6%, $50 par value, cumulative preferred stock and 148000 shares of $1 par value common stock outstanding at December 31, 2020, and December 31, 2019. The board of directors declared and paid a $14000 dividend in 2019. In 2020, $70000 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2020?
Answers
Answer:
The dividends received by the preferred stockholders in 2020 are $30400.
Explanation:
The cumulative preferred stock is the form of preferred stock that accumulates or accrues dividends in case the company does not pay or partially pay dividends to preferred stock in a particular year. This means that the dividends are accrued and the company will need to pay these dividends first in the future whenever it declares dividends.
The total dividends per year on preferred stock is,
Preferred Stock dividends = 50 * 0.06 * 7400 = $22200 per year
The preferred stock dividend that was accrued at the end of 2019 after the dividend payment of $14000 is,
Accrued dividends - Preferred stock = 22200 - 14000 = $8200
In 2020 the company will need to pay this accrued dividend along with the dividend for 2020 on preferred stock. Thus, in 2020 the preferred stock holders will receive dividends of,
Preferred stock dividend to be paid in 2020 = 8200 + 22200 = $30400
Schaeffer Shippers announced on May 1 that it will pay a dividend of $1.20 per share on June 15 to all holders on record as of May 31st. The firm's stock price closed today at $42 a share. Assume all investors are in the 28 percent tax bracket. If tomorrow is the ex-dividend date, what would you expect the opening price to be tomorrow morning assuming all else is held constant
Answers
Answer:
$41.14
Explanation:
Declared dividend per share = $1.20
Tax on declared dividend per share = $1.20 * 28% = $0.3360
Net Declared dividend per share = $1.20 - $0.3360 = $ 0.864
Firm's closing stock price per share today = $42
Opening share price tomorrow = $42 - $0.8640 = $41.1360, approximately $41.14.
Final answer:
An investor would be willing to pay for a share of stock in Babble, Inc. based on the present discounted value of the expected dividends. Assuming a PDV of total profits at $51.3 million for 200 shares, the price per share is calculated to be approximately $256,500.
Explanation:
To calculate what an investor is willing to pay for a share of stock in Babble, Inc., we need to compute the present value of the future dividends, as these are the profits that investors will receive. Since the company will be disbanded in two years, we will not consider any growth beyond that point, and instead, we will focus on the present value of the dividends to be received over the next two years.
Firstly, one must find the present value (PV) of each dividend payment separately using a suitable discount rate, which reflects the rate of return investors require. Generally, the discount rate can be considered equivalent to the opportunity cost of capital or the expected return rate provided by other investments with a similar risk profile. However, the question does not provide the discount rate, so we'll assume that it has been calculated elsewhere.
Once the present discounted value (PDV) for each of the dividend amounts has been found, the sum of these represents the total PDV of the future dividends payable to the company's shareholders. The PDV of total profits must be divided by the number of shares to find the price per share. If the PDV of the profits is $51.3 million and there are 200 shares, then the price per share would be:
PV of total profits / Number of shares = $51.3 million / 200
= $256,500 per share.
This calculation gives the price that an investor might be willing to pay for a share of Babble, Inc., considering the dividends they would receive.
Which of the following is true? Internal equity is cheaper than external equity. The advantage of using debt for a firm is that it increases the chance of going bankruptcy. The chance of going bankruptcy tends to be very low for a firm, therefore, firms can ignore it when determining their capital structure. The before-tax and after tax cost of equity is different.
Answers
Answer:
Yes it is True that Internal equity is cheaper than external equity.
Explanation:
Internal equity compares the pay rates between colleagues in the same firm. It is used as standard to ensure fairness. It is the net income realized after subtracting tax and liabilities as well as expenses incurred.
External equity on the other hand is comparing the pay workers in different organizations. It helps to set a benchmark for payment of staff at the same grade level in different companies. It can be used as a yardstick to measure whether a particular company's pay rate competes favorably with other companies.
Internal equity also called retained earnings is generally less expensive than external equity for tax reasons among others.
Benjamin Company had the following results of operations for the past year: Sales (16,500 units at $16) $ 264,000 Direct materials and direct labor $ 165,000 Overhead (20% variable) 33,000 Selling and administrative expenses (all fixed) 28,050 (226,050) Operating income $ 37,950 A foreign company offers to buy 4125 units at $10.40 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $640 and selling and administrative costs by $580. Assuming Benjamin's productive capacity is 16,500 units per year and it accepts the offer, its profits will:
Answers
Answer:
profits will decrease by $1,220
Explanation:
Consider the Incremental Costs and Revenues that arise from accepting the offer.
Sales ( 4125 units×$10.40) 42,900
Direct materials and direct labor ( $ 165,000/16,500 ×4125 units) (41,250)
Variable Overheads (33,000×20%)/16,500 ×4125 units) (1,650)
Incremental Fixed overheads (640)
Incremental selling and administrative costs (580)
Incremental Income/(loss) (1,220)
Therefore profits will decrease by $1,220 if it accepts the offer.
If Benjamin Company accepts the foreign company's offer, its profits will decrease by $10,042.50.
Benjamin Company's current operation involves selling 16,500 units at $16 each, resulting in a total sales revenue of $264,000. The company incurs direct materials and direct labor costs of $165,000, variable overhead costs of $33,000, and fixed selling and administrative expenses of $28,050, resulting in an operating income of $37,950.
Now, if the company accepts the foreign company's offer to buy 4,125 units at $10.40 per unit, the new sales revenue from these units would be $42,840. However, this decision comes with additional costs. Selling these units would increase variable manufacturing costs, fixed overhead, and selling and administrative costs by $10,042.50 (calculated as $4.40 * 4,125 units + $640 + $580).
As a result, the overall effect on profits would be a decrease of $10,042.50. This reduction in profits is attributed to the lower selling price of the units and the added variable and fixed costs associated with the foreign company's offer.
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Longhorn Company reports current E&P of $100,000 in 20X3 and a deficit of ($200,000) in accumulated E&P at the beginning of the year. Longhorn distributed $300,000 to its sole shareholder on January 1, 20X3. The shareholder's tax basis in his stock in Longhorn is $100,000. How is the distribution treated by the shareholder in 20X3?
Answers
Answer: Dividend of $100,000, Capital Gain of $100,000 and Tax Free Return on basis of $100,000
Explanation:
Longhorn Company reports current E&P of $100,000 in 20X3 and still distributed $300,000 to it's sole shareholder. Because it had $100,000 in current E&P, that is all it can declare as Dividends. For this reason, the shareholder will recognize $100,000 as Dividends.
The Shareholder has a basis of $100,000 in the stock of Longhorn. As a result of this, $100,000 of the Distribution will be termed a TAX FREE Return on Basis because he is receiving a return on his basis that is neither a dividend nor capital gain.
The remaining $100,000 will be considered a Capital Gain as it reflects a rise in his stock.
The market price of a security is $25. Its expected rate of return is 12%. The risk-free rate is 4% and the market risk premium is 6.0%. What will be the market price of the security if its correlation coefficient with the market portfolio doubles (and all other variables remain unchanged)? Assume that the stock is expected to pay a constant dividend in perpetuity. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answers
Given Information:
Market price of security = $25
Expected rate = 12%
Risk-free rate = 4%
Market risk premium = 6%
Answer:
New market price of security = $15.03
Explanation:
The new market price of security can be calculated by,
P = Dividend/Expected return
Where Dividend is given by
Dividend = Market price*Expected rate
D = $25*0.12
D = 3$
Expected return is given by
Expected return = Risk-free rate + β*(market risk premium)
β can be calculated as
β = (Expected rate - Risk-free rate)/market risk premium
β = (12 - 4)/6
β = 1.33%
Since it is given that correlation coefficient with the market portfolio doubles, therefore, β will get doubled too because they are directly proportional.
β = 2*1.33%
β = 2.66%
So the Expected return is
Expected return = 4 + 2.66*(6)
Expected return = 19.96%
So the new market price of security is,
P = Dividend/Expected return
P = 3/0.1996
P = $15.03
Which of the following is an example of a task conflict? Sally and her manager have just had a heated argument because Sally feels she has been overlooked for a promotion that was her rightful due. Henry and Solomon have been reprimanded by their project lead for spending too much time using the Internet for personal use at work. Linda and Dorothy had a disagreement over which of their employees should be assigned to work on a high-priority project. The company head has resigned after longstanding conflict between him and his top management employees. Will and Hilda have been removed from the team they worked with after they were overheard making derogatory comments about one of their colleague's racial origin.
Answers
Answer:
Linda and Dorothy had a disagreement over which of their employees should be assigned to work on a high-priority project.
Explanation:
Linda and Dorothy having a disagreement over which of their employees should be assigned to work on a high-priority project is an example of a task conflict.
Task conflict occurs in a business or an organization when two staffs or employees aren't able to forge ahead on a task as a result of divergent and differing opinions, needs and attitudes.
Also, it could be conflict over procedures for executing a task, organizational policies and distribution of resources or the method of delegating a specific tasks thus limiting the achievement of set goals and objectives of the organization.
The task conflict is the conflict or the disagreement in the workplace between differing attitudes, and differing working style. It occur due to accomplishment of the work in the best possible manner.
The example of task conflict is:
Linda and Dorothy had a disagreement over which of their employees should be assigned to work on a high-priority project.
In the given case the task conflict occurred when two employees were unable to forge ahead on the task decided for occurring the result as a divergent and having differing opinions, needs, and attitudes.
The task conflict may occur over procedures for exercising the task.
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15-10 A firm has 60,000 shares whose current price is $45.90. Those stockholders expect a return of 14%. The firm has a 3-year loan of $1,900,000 at 7.3%. It has issued 22,000 bonds with a face value of 1000, 20 years left to maturity, semiannual compounding, a coupon interest rate of 7%, and a current price of $925. Using market values for debt and equity, what is the firm’s cost of capital: A) Before taxes? B) After taxes with a tax rate of 21%?
Answers
Answer:
before taxes:
WACC 8.74959%
after a 21% tax-rate:
WACC 7.23587%
Explanation:
Equity: 60,000 x $45.90 = 2,754,000
Liabilities: 1,900,000 + 22,000 x 925 = 22,250,000
Value: 25,004,000
We solve for weights:
Ew = 2,754,000 / 25,004,000 = 0,1101423772196449
Lw = 22,250,000 / 25,004,000 = 0,8898576227803551
Cost of debt will be the market value rate of the bond That is the rate at which the future coupon payment and maturity matches the market price of the bond
we solve this using excel goal seek:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 35.00
time 20
rate 0.040545327
[tex]35 \times \frac{1-(1+0.0405453269606019)^{-20} }{0.0405453269606019} = PV\\[/tex]
PV $473.3728
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity $1,000.00
time 20.00
rate 0.04055
[tex]\frac{1000}{(1 + 0.0405453269606019)^{20} } = PV[/tex]
PV 451.6270
PV c $473.3728
PV m $451.6270
Total $924.9998
a semiannual rate of 0.04055 is the market rate thus, cost of debt is
0.04055 x 2 = 0.081
Now we can solve for the WACC without taxes:
[tex]WACC = K_e(\frac{E}{E+D}) + K_d(1-t)(\frac{D}{E+D})[/tex]
Ke 0.14000
Equity weight 0.1101
Kd 0.081
Debt Weight 0.8899
t 0
[tex]WACC = 0.14(0.1101) + 0.081(1-0)(0.8899)[/tex]
WACC 8.74959%
wiht taxes of 21%
t 0.21
[tex]WACC = 0.14(0.1101) + 0.081(1-0.21)(0.8899)[/tex]
WACC 7.23587%
Blue Corporation purchases a patent from Crane Company on January 1, 2020, for $41,000. The patent has a remaining legal life of 16 years. Blue feels the patent will be useful for 10 years. Assume that at January 1, 2022, the carrying amount of the patent on Blue’s books is $32,800. In January, Blue spends $29,600 successfully defending a patent suit. Blue still feels the patent will be useful until the end of 2029. Prepare the journal entries to record the $29,600 expenditure and 2022 amortization. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Answers
Final answer:
To record Blue Corporation's patent defense expenditure, debit the patent account and credit Cash. Then, calculate the patent's new carrying amount and record the 2022 amortization based on the remaining useful life.
Explanation:
When Blue Corporation purchased a patent from Crane Company, it was expected to be useful for 10 years. Spending $29,600 defending the patent suit is an additional investment into the patent, which effectively increases its carrying value. The patent's amortization should reflect the revised carrying amount over the remaining useful life from the date of the legal expenditure.
The journal entry to record the legal expenditure, assuming this adds value to the patent and is not immediately expensed, would be:
Patents (or Patent defense expenditure) Dr. $29,600
Cash Cr. $29,600
Next, to calculate the amortization for the year 2022, first, we adjust the carrying amount of the patent:
Carrying amount as of January 1, 2022: $32,800
Add: Patent defense expenditure: $29,600
New carrying amount: $62,400
Then we calculate the amortization expense:
Amortization for 2022 = New carrying amount / Remaining useful life of the patent (which is 8 years from 2022 to the end of 2029)
Amortization for 2022 = $62,400 / 8 = $7,800
The journal entry to record the amortization for 2022 would be:
Amortization Expense Dr. $7,800
Accumulated Amortization - Patents Cr. $7,800
Paney Company makes calendars. Information on cost per unit is as follows: Direct materials: $1.50 Direct labor: $1.20 Variable overhead: $0.90 Variable marketing expense: $0.40 Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000. The price per calendar is $10. What is the break-even point in units?
Answers
Answer:
Break-even point in units= 8,000 units
Explanation:
Giving the following information:
Variable costs:
Direct materials $1.50
Direct labor 1.20
Variable overhead 0.90
Variable marketing expense 0.40
Total variable costs= 4
Fixed costs:
The fixed marketing expense totaled $13,000
The fixed administrative expense totaled $35,000.
Total fixed costs= $48,000
The price per calendar is $10.
To calculate the break-even point in dollars, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 48,000/ (10 - 4)
Break-even point in units= 8,000 units
Marissa, a product manager, thinks her company's InstaCup coffee maker is currently in the growth stage of the product life cycle. If so, the profits for the InstaCup coffee maker ___ and the number of competitors ____. a. are declining; is growing b. are negative; is growing c. have peaked; is declining d. are increasing; is growing e. are declining; is declining
Answers
Answer:
D.
Explanation:
A Product Life Cycle is a cycle of growth or decline that a product goes through in a market. The cycle defines the business and sales measures of the product. The cycle is divided into four stages: Introduction, Growth, Maturity, and Decline.
The stage at which Merissa's company InstaCup Coffee is the Maturity Stage.
In the stage, the growth of the sales reaches its highest peak while the product reaches its maximum. At this stage, while the product reaches it peak the competition also begins to increase. The profits of Marissa's InstaCup coffee maker are increasing as well as the number of competitors.
So, from the given options the correct one is D.
In the growth stage of the product life cycle, the profits for the InstaCup coffee maker are increasing, and the number of competitors is growing.
Explanation:Considering that Marissa, a product manager, believes her company's InstaCup coffee maker is currently in the growth stage of the product life cycle, the profits for the InstaCup coffee maker should be increasing, and the number of competitors in the market is likely growing. During the growth stage, a product typically experiences rapid sales growth, increasing market acceptance, and expanding profits as more consumers are aware of and are willing to purchase the product. Additionally, seeing the success of the product, more competitors are enticed to enter the market with similar offerings. Hence, the correct answer to her statement is 'd. are increasing; is growing'.
Jiminy’s Cricket Farm issued a 15-year, 10 percent semiannual bond 4 years ago. The bond currently sells for 91 percent of its face value. The company’s tax rate is 38 percent. Suppose the book value of the debt issue is $60 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 11 years left to maturity; the book value of this issue is $35 million, and the bonds sell for 51 percent of par. What is the company’s total book value of debt? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.) Total book value $ What is the company’s total market value of debt? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.) Total market value $ What is your best estimate of the aftertax cost of debt? (Round your answer to 2 decimal places. (e.g., 32.16)) Cost of debt %
Answers
Answer:
Find the answers below
Explanation:
The total book value of the debt is the sum of the two bonds book values
total book value=$60 million+$35 million=$95 million
Total market value of bonds is the sum of the two bonds market values
total market values=$60 million*91%+$35 million*51%
=$54.6 million+$17.85 million=$72.45 million
After tax cost of debt =pretax cost of debt*(1-t) where t is the tax rate of 38% or 0.38
For the first bond:
=rate(nper,pmt,-pv,fv)
nper is the number of interest the bonds would pay from now on,i.e (15-4)*2=22
pmt is the semiannual interest payment,which is:$60 million*10%/2=$3 million
pv is the market value of $54.6 million
fv is the book value of $60 million
=rate(22,3,-54.6,60)=5.73%
5.73% is the semiannual rate ,where 11.46% is the annual rate
after tax cost of debt=11.46%*(1-0.38)=7.11%
the second bond:
nper is 11 (11 years left to maturity)
pmt is nil since it is a zero coupon bond
pv is $17.85 million
fv is $35 million
=rate(11,0,-17.85,35)=6.31%
after tax cost of debt=6.31% *(1-0.38)=3.91%
Cherry Tree Company has the following balance sheet information as of December 31, 2019Cash $10,000Marketable Securities $20,000Accounts Receivable $30,500Prepaid Expenses $2,000Inventory $34,000Property, Plant and Equipment (net of Accumulated Depreciation) $54,000Accounts Payable $45,000Long-term Bonds Payable $50,000Owner's Equity $55,500What is Cherry Tree Company's current ratio?
Answers
Answer:
2.14 times
Explanation:
The computation of the current ratio is shown below:
Current ratio = Current assets ÷ Current liabilities
where,
Current assets is
= Cash + marketable securities + account receivable + prepaid expense + inventory
= $10,000 + $20,000 + $30,500 + $2,000 + $34,000
= $96,500
And, the current liabilities is account payable i.e $45,000
So, the current ratio is
= $96,500 ÷ $45,000
= 2.14 times
We simply applied the above formula
Suppose the spouse of the primary earner in the household is considering joining the labor force. The spouse currently cares for two children and, if employed, would earn $20 per hour for 40 hours per week. The cost of child care would be $10 per hour for 50 (not 40) hours per week. Assume that the marginal tax rate on work is 50%. Assume that child care is tax deductible and that child care at home is NOT imputed and taxed. What is the after-tax, after-child-care addition to family income of the spouse working each week?
Answers
Answer: -$100
Explanation:
Assuming that that child care is tax deductible and that child care at home is NOT imputed and taxed then we shall tax the earnings and deduct child care from it.
The couple makes $20 per week per 40 hour week.
= 20 * 40
= $800
Marginal tax rate is 50% so,
= 800 * 50%
= $400
After tax addition is $400
Childcare is $10 per hour for 50 (not 40) hours per week so,
= 10 * 50
= $500
After-Child-Care Contribution is,
= 400 - 500
= -$100
The after-tax, after-child-care addition to family income of the spouse working each week is -$100
Dorglass Incorporated reported the following information about the production and sale of its only product during the first month of operations: Selling price per unit $225 Sales $360,000 Direct materials used $176,000 Direct labor $100,000 Variable factory overhead $44,000 Fixed factory overhead $80,000 Variable selling and administrative expenses $20,000 Fixed selling and administrative expenses $10,000 Ending inventory, Direct Materials 0 Ending inventory, Work-in-process 0 Ending inventory, Finished Goods 400 units Under Variable Costing, the Product (Inventoriable) Cost per unit is ________. A. $225 B. $160 C. $200 D. $170
Answers
Answer:
B. $160
Explanation:
For computing the product cost per unit first we have to find out the total number of units which is
= $360,000 ÷ $225 + 400 units
= 1,600 units + 400 units
= 2,000 units
Now the product cost per unit is
= (Direct material used + direct labor + variable factory overhead) ÷ ( total units)
= ($176,000 + $100,000 + $44,000) ÷ (2,000 units)
= ($320,000) ÷ (2,000 units)
= $160
aurum Appliances manufactures three sizes of kitchen appliances: small, medium, and large. Product information is provided below.
Small Medium Large
Unit selling price $400 $600 $1,200
Unit costs:
Variable manufacturing (220) (280) (500)
Fixed manufacturing (80) (130) (240)
Fixed selling and administrative (60) (75) (120)
Unit profit $ 40 $ 115 $340
Demand in units 100 120 100
Machine-hours per unit 20 40 100
The maximum machine-hours available are 6,000 per week.
Which of the three product models should be produced first of management incorporates a short-run profit maximizing strategy?
Answers
Answer:
The large application should be produced first by management in order to incorporate short run profit maximizing strategy.
Explanation:
In order to maximize profit in the short run by management, we need to calculate the unit profit per machine hour for each appliances. Using the following formulae, as shown below:
Unit Profit / Machine-hours per unit = Unit Profit per Machine hour
Small Application
40 / 20 = $2 per machine hour
Medium Application
115 / 40 = $2.875 per machine hour
Large Application
340 / 100 = $3.4 per machine hour
As per the above calculation the large application gives the highest profit per machine hour so should be produced first. Afterwards if any machine hour is left then medium application should be produced second and finally, small application third.
Robertson and Enrickson prepared an agreement to enter into a partnership. Both of the partners realized that outside capital was needed for the firm to begin operations; however, they also realized that their individual and combined credit ratings would not attract sufficient funds. In order to improve the new partnership’s ability to attract investment capital, and with the approval of Enrickson, Robertson added his friend Thompson’s name to the partnership agreement. Thompson, a well-known personality from a family of means, was not asked to be a partner and knew nothing of Robertson's and Enrickson's actions. Upon seeing Thompson's name on the partnership agreement, a local bank readily agreed to advance Robertson and Enrickson the total sum required to begin operations. The partnership has now failed, and the bank would like to hold Thompson, Robertson and Enrickson liable for the amount of the loan. Will the bank recover from Thompson, Robertson and Enrickson?
Answers
Answer:
No the bank can’t pursued to embrace Thompson liable for the loan as Thompson isn't a business partner any more within the business and not has remained informed that his name was related to the shape as a business partner .
Here during this case Thompson isn't a companion by rule of evidence as he has not delineate himself because the business partner and has no part to play within the research of the business partnership contract. what is more he's additionally uninformed concerning his name getting used in the business.
Thus, he can't be hold liable for the loan , relatively Erickson and Oscar Robertson are going to be accused for deception or misrepresentation for mistreatment Thompson's name while not his assent and data.
Skysong, Inc., spent $50,400 in attorney fees while developing the trade name of its new product, the Mean Bean Machine. Prepare the journal entries to record the $50,400 expenditure and the first year’s amortization, using an 8-year life. Use the account title "Trade Names". (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Answers
Answer and Explanation:
The Journal entry is shown below:-
Trade Names Dr, $50,400
To Cash $50,400
(Being trade names is recorded)
Here we debited trade names as it increasing the assets and we credited the cash as decreasing the assets.
Amortization Expense Dr, $6,300
($50,400 ÷ 8)
To Trade Names $6,300
(Being amortization expenses is recorded)
Here, we debited the amortization expenses are increased the expenses and we credited the trade names as decrease the assets.
Final answer:
The expenditure on attorney fees for the trade name is recorded by debiting Trade Names and crediting Cash. The first year's amortization is recorded by debiting Amortization Expense and crediting Accumulated Amortization - Trade Names with $6,300, based on an eight-year life.
Explanation:
The expenditure and subsequent amortization of the trade name costs for Skysong, Inc. involve two separate journal entries. Initially, the expenditure for the attorney fees to develop the trade name must be recorded. Then, the amortization of the trade name cost over its useful life begins. Since the trade name has an eight-year life, the annual amortization expense would be calculated by dividing the initial cost by the number of years.
To record the $50,400 expenditure for developing the trade name, the entry would be:Debit Trade Names $50,400
Credit Cash (or relevant payable account) $50,400For the first year's amortization:
Debit Amortization Expense $6,300
Credit Accumulated Amortization - Trade Names $6,300
This represents an equal yearly distribution of the cost, which is ($50,400 divided by 8 years) = $6,300 per year.
Which Brass instrument does not use valves?
(1 point)
Extra Content
T
A.
Trumpet
B.
Trombone
C.
French Horn
D.
Tuba
Answers
Answer:
Trombone- it's the only brass instrument that doesn't have valves
Explanation:
The bounded rationality decision-making model:
A. describes a series of steps that decision makers should consider if their goal is to maximize their outcome and make the best choice.
B. recognizes the limitations of decision making processes by having individuals knowingly limit their options to a manageable set and choose the best alternative without conducting an exhaustive search of alternatives.
C. refers to arriving at decisions without conscious reasoning, arguing that experts make decisions by scanning the environment for cues to recognize patterns.
D. refers to arriving at decisions after first gathering information about the problem and then setting the problem consciously aside until an insightful solution to the problem arises.
Answers
Answer:
I forgot it dang it
Explanation:
You are valuing a company that is projected to generate a free cash flow of $10 million next year, growing at a stable 3.0% rate in perpetuity thereafter. The company has $22 million of debt and $8.5 million of cash. Cost of capital is 10.0%. There are 50 million shares outstanding. How much is each share worth according to your valuation analysis
Answers
Answer:
$2.67 per share
Explanation:
To start with,we calculate the present worth of the company using the below formula:
present worth of the company=free cash flow*(1+g)/r-g
g is the growth rate of the free cash flow which is 3.0%
r is the cost of capital of 10%
present worth=$10 million*(1+3%)/10%-3%
=10.3/7%
=$ 147.14 million
However ,the value of total equity is computed thus:
equity=present worth+cash-debt
cash is $8.5 million
debt is $22 million
equity=$ 147.14 +$8.5-$22
equity=$133.64 million
value of each share=equity value /number of shares
number of shares is 50 million
value of each=$133.64 million/50 million=$2.67 per share
Continent Construction Company is a building contractor specializing in small commercial buildings. The company has the opportunity to accept one of two jobs; it cannot accept both because they must be performed at the same time and Continent does not have the necessary labor force for both jobs. Indeed, it will be necessary to hire a new supervisor if either job is accepted. Furthermore, additional insurance will be required if either job is accepted. The revenue and costs associated with each job follow:
Cost Category Job A Job B
Contract price $ 870,000 $ 820,000
Unit-level materials 257,000 227,000
Unit-level labor 274,000 324,000
Unit-level overhead 47,000 37,000
Supervisor’s salary 77,000 77,000
Rental equipment costs 29,500 32,500
Depreciation on tools (zero market value) 23,400 23,400
Allocated portion of companywide facility-sustaining costs 11,100 9,300
Insurance cost for job 19,600 19,600
Required
Assume that Continent has decided to accept one of the two jobs. Fill in the information relevant to selecting one job versus the other. Recommend which job to accept.
Assume that Job A is no longer available. Continent's choice is to accept or reject Job B alone. Fill in the information relevant to this decision. Recommend whether to accept or reject Job B.
Decision Job A Job B
Contract price
Unit-level materials
Unit-level labor
Unit-level overhead
Supervisor’s salary
Rental equipment costs
Depreciation on tools (zero market value)
Allocated portion of companywide facility-sustaining costs
Insurance cost for job
Contribution to profit (loss) $0 $0
Recommend which job to accept?
Decision Job B
Contract price
Unit-level materials
Unit-level labor
Unit-level overhead
Rental equipment costs
Depreciation on tools (zero market value)
Allocated portion of companywide facility-sustaining costs
Supervisor’s salary
Insurance cost for job
Contribution to profit (loss) $0
Recommend whether to accept or reject job B?
Answers
Final answer:
The detailed answer provides a breakdown of costs and revenue for Job A and Job B, advising to accept Job A and reject Job B due to profit considerations.
Explanation:
Decision:
Job A:Contract price: $870,000Total Costs:Unit-level materials: $257,000Unit-level labor: $274,000Unit-level overhead: $47,000 Supervisor’s salary: $77,000 Rental equipment costs: $29,500 Depreciation on tools: $23,400 Allocated portion of facility-sustaining costs: $11,100 Insurance cost for job: $19,600Calculating Total Costs for Job A:Total Costs for Job A = Sum of all costsTotal Costs for Job A = $257,000 + $274,000 + $47,000 + $77,000 + $29,500 + $23,400 + $11,100 + $19,600 = $739,600Contribution to Profit for Job A = Contract price - Total Costs for Job AContribution to Profit for Job A = $870,000 - $739,600 = $130,400Job B:Contract price: $820,000Total Costs: Unit-level materials: $227,000 Unit-level labor: $324,000 Unit-level overhead: $37,000 Supervisor’s salary: $77,000 Rental equipment costs: $32,500 Depreciation on tools: $23,400 Allocated portion of facility-sustaining costs: $9,300 Insurance cost for job: $19,600Calculating Total Costs for Job B:Total Costs for Job B = Sum of all costsTotal Costs for Job B = $227,000 + $324,000 + $37,000 + $77,000 + $32,500 + $23,400 + $9,300 + $19,600 = $749,800Contribution to Profit for Job B = Contract price - Total Costs for Job BContribution to Profit for Job B = $820,000 - $749,800 = $70,200Decision for Job A:Contribution to Profit for Job A: $130,400Recommendation: Accept Job A as it yields a higher contribution to profit.Decision for Job B (if Job A is no longer available):Contribution to Profit for Job B: $70,200Recommendation: Accept Job B alone if Job A is no longer available as it generates a positive contribution to profit, albeit lower than Job A.You are considering investing $1,000 in a T-bill that pays 0.05 and a risky portfolio, P, constructed with two risky securities, X and Y. The weights of X and Y in P are 0.60 and 0.40, respectively. X has an expected rate of return of 0.14 and variance of 0.01, and Y has an expected rate of return of 0.10 and a variance of 0.0081. What would be the dollar value of your positions in X, Y, and the T-bills, respectively, if you decide to hold a portfolio that has an expected outcome of $1,120? Group of answer choices a.$568; $54; b.$378 $108; c.$514; $378 d.$378; $54; e.$568 $568; f.$378; $54
Answers
Answer:
c)$568; $378; $54
Explanation:
($1,120 - $1,000)/$1,000 = 12%
(0.6)14% + (0.4)10% = 12.4%
12% = w5% + 12.4%(1 - w)
w = .054
1-w = .946
w = 0.054($1,000)
= $54 (T-bills)
1 - w = 1 - 0.054 = 0.946
0.946($1,000) = $946
$946 x 0.6 = $568 in X
$946 x 0.4 = $378 in Y.
Final answer:
To achieve an expected outcome of $1,120, invest $672 in X, $448 in Y, and $0 in T-bills.
Explanation:
The expected outcome of $1,120 can be achieved by investing in a T-bill, risky securities X and Y.
The dollar value of positions in X, Y, and T-bills would be $378, $54, and $688, respectively.
Calculations:
X position = $1,120 * 0.60 = $672
Y position = $1,120 * 0.40 = $448
T-bill position = $1,120 - $672 - $448 = $0
Discretionary fiscal policy that might occur is ______. Automatic fiscal policy that might occur is ______. A. a decrease in transfer payments and an increase in taxes with no interference by Congress; a decrease in government expenditure and an increase in taxes by a decision of Congress B. an increase in transfer payments and a fall in taxes with no interference by Congress; an increase in government expenditure and a cut in taxes by a decision of Congress C. an increase in government expenditure and a cut in taxes by a decision of Congress; an increase in transfer payments and a fall in taxes D. a decrease in government expenditure and an increase in taxes by a decision of Congress; a decrease in transfer payments and an increase in taxes with no interference by Congress
Answers
Answer: a decrease in government expenditure and an increase in taxes by a decision of Congress; a decrease in transfer payments and an increase in taxes with no interference by Congress (D)
Explanation:
Discretionary fiscal policy is a government policy that changes government spending or taxes. The purpose of discretionary fiscal policy is to either expand or shrink the economy. It needs approval from the Congress and President. Its examples are increases in spending on bridges, roads, stadiums etc.
Automatic fiscal policy use spending in the form of taxes and transfer payments to automatically steady the economy. An example is when unemployed become eligible for the unemployment benefits after when losing their jobs during a recession.
A firm's target capital structure is 40 percent debt and 60 percent common equity. Its bonds have a 12 percent coupon, paid semiannually, a current maturity of 20 years, and sell for $1,000. The firm's marginal tax rate is 20 percent. The firm's policy is to use a risk premium of 4 percentage points when using the bond-yield-plus-risk-premium approach to find the cost of retained earnings (note that retained earnings is internally generated equity). The firm uses no preferred stock.
Required:
1. Calculate the firm's weighted average cost of capital (WACC).
Answers
Answer:
The firm's weighted average cost of capital (WACC) is 13.44%
Explanation:
According to the given data we have the following:
YTM = 12% = Pretax Cost of Debt
Cost of Equity = 12% + 4% = 6%
Therefore, to calculate the firm's weighted average cost of capital (WACC) we would have to use the following formula:
WACC = Weight of debt * Pretax cost of debt * (1 - Tax) + Weight of equity * Cost of Equity
WACC = 40% * 12% * (1 - 20%) + 60% * 16%
WACC = 13.44%
Ari, Inc. is working on its cash budget for December. The budgeted beginning cash balance is $14,000. Budgeted cash receipts total $127,000 and budgeted cash disbursements total $126,000. The desired ending cash balance is $40,000. Any borrowing is in multiples of $1,000 and interest is paid in the month following the borrowing.To attain its desired ending cash balance for December, the company needs to borrow:________.
A. $0.
B. $25,000.
C. $55,000.
D. $40,000.
Answers
Answer:
The company needs to borrow $25000 and option B is the correct answer.
Explanation:
If the ending amount of cash for the year is less than the desired ending balance, then the company will need to borrow to maintain the desired level of cash balance.
To calculate the amount needed to be borrowed, we first compute the ending cash balance for December. The ending cash balance will be,
Closing Balance = Opening Balance + Receipts - Payments
Closing Balance - December = 14000 + 127000 - 126000
Closing Balance - December = $15000
The difference between the closing cash balance and the desired closing cash balance is the amount that the firm will need to borrow.
Amount need to be borrowed = 40000 - 15000 = $25000
Ari, Inc. needs to borrow $25,000 to reach its desired ending cash balance for December after accounting for its beginning balance, cash receipts, and disbursements.
Explanation:To determine how much Ari, Inc. needs to borrow in December, we need to consider the desired ending cash balance, initial cash balance, total cash receipts, and total cash disbursements. The calculation is as follows:
Beginning cash balance: $14,000Add: Budgeted cash receipts: $127,000Less: Budgeted cash disbursements: $126,000Equals: Projected ending cash balance without borrowing: $15,000However, the company desires an ending cash balance of $40,000. Therefore, Ari, Inc. needs to borrow the difference between the projected ending balance and the desired ending balance.
Desired ending balance - Projected ending balance without borrowing = Amount to borrow
$40,000 - $15,000 = $25,000
Ari, Inc. will need to borrow $25,000 to reach its desired ending cash balance for December.
Learn more about Borrowing Calculation here:https://brainly.com/question/31786658
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The following information is provided for each division. Investment Center Net Income Average Assets Cameras and camcorders $ 4,500,000 $ 20,000,000 Phones and communications 1,500,000 12,500,000 Computers and accessories 800,000 10,000,000 Assume a target income of 12% of average invested assets. Required: Compute residual income for each division. (Enter losses with a minus sign.)
Answers
Answer:
Cameras & Camcorders = $2,100,000
Phones & Communication = 0
Computers &Accessories = -$400,000
Explanation:
Computation of the given data are as follow:-
Target Income = Average Assets × Target Income Rate of Average Invested Assets
Cameras & Camcorders = $20,000,000 × 12÷100 = $2,400,000
Phones &Communication = $12,500,000 × 12÷100 = $1,500,000
Computers &Accessories = $10,000,000 × 12÷100 = $1,200,000
Residual Income = Net Income - Target Income
Cameras & Camcorders = $4,500,000 - $2,400,000 = $2,100,000
Phones & Communication = $1,500,000 - $1,500,000 = 0
Computers &Accessories = $800,000 - $1,200,000 = -$400,000
Final answer:
Residual income is calculated by subtracting the target income from the net income of each division. For Cameras and Camcorders, the residual income is $2,100,000. Phones and Communications breaks even, and Computers and Accessories has a negative residual income of -$400,000.
Explanation:
Calculating Residual Income
To calculate the residual income for each division, we first determine the target income by applying the target return rate (which is 12%) to the average invested assets. The residual income is then computed by subtracting this target income from the net income of each division.
For the Cameras and Camcorders division:
Target Income = 12% of $20,000,000 = $2,400,000
Residual Income = Net Income - Target Income
Residual Income = $4,500,000 - $2,400,000 = $2,100,000
For the Phones and Communications division:
Target Income = 12% of $12,500,000 = $1,500,000
Residual Income = Net Income - Target Income
Residual Income = $1,500,000 - $1,500,000 = $0
For the Computers and Accessories division:
Target Income = 12% of $10,000,000 = $1,200,000
Residual Income = Net Income - Target Income
Residual Income = $800,000 - $1,200,000 = -$400,000
Dancey, Reese, Newman, and Jahn were partners who shared profits and losses on a 4:2:2:2 basis, respectively. They were beginning to liquidate their business. At the start of the process, Capital account balances were as follows:
Dancey, capital $ 72,000
Reese, capital 32,000
Newman, capital 52,000
Jahn, capital 24,000
Which one of the following statements is true for a predistribution plan?
A. The first available $16,000 would go to Newman. The next $12,000 would go $8,000 to Dancey and $4,000 to Newman. The following $32,000 would be shared by Dancey, Reese, and Newman. The total distribution would be $60,000 before all four partners share any further payments equally.B. The first available $16,000 would go to Newman. The next $12,000 would go $8,000 to Dancey and $4,000 to Newman. The following $32,000 would be shared by Dancey, Reese, and Newman. The total distribution would be $60,000 before all four partners share any further payments in their profit and loss sharing ratios.C. The first available $8,000 would go to Newman. The next $4,000 would be split equally between Dancey and Newman. The following $12,000 would be shared by Dancey, Reese, and Newman. The total distribution would be $24,000 before all four partners share any further payments equally.D. The first available $8,000 would go to Newman. The next $4,000 would be split equally between Dancey and Newman. The following $12,000 would be shared by Dancey, Reese, and Newman. The total distribution would be $24,000 before all four partners share any further payments in their profit and loss sharing ratios.E. The first $20,000 would go to Newman. The next $8,000 would go to Dancey. The next $12,000 would be shared by Dancey, Reese, and Newman. The total distribution would be $40,000 before all four partners share any further payments equally.
Answers
Answer:
0
Explanation:
-The first available $16,000 would go to Newman. The next $12,000 would go $8,000 to Dancey and $4,000 to Newman. The following $32,000 would be shared by Dancey, Reese and Newman. The total distribution would be $60,000 before all four partners share any further payments in their profit and loss sharing ratios First eliminate lowest value
J = $24,000 - $24,000 = 0
D = $72,000 - $48,000 = $24,000 - $16,000 = $8,000 - $8,000 = 0
R = $32,000 - $24,000 = $8,000 – $8,000 = 0
N = $52,000 - $24,000 = $28,000 – $8,000 = $20,000 – $4,000 = $16,000.